Article / 26 July 2016 at 1:51 GMT

Morning Report APAC: Crude sinks, global wheat prices diverge

APAC Sales Trading Desk / Saxo Capital Markets

  • Gold hit a four-week low on the firmer US dollar in the run-up to the Fed meeting
  • Net long positions for Silver extended for the sixth week running
  • Oil futures hit their lowest level in three months on inventory concerns
  • There is divergence in wheat markets internationally
  • The US wheat price closed at a 10-year low, while the EU price hit a 7-month high


By Saxo APAC Sales Trading





1740: GBP - Bank of England Indexed Long-Term Repo Operation Results
Overnight news

For the most part it has been a quiet start to the week in markets as investors await the likes of the Federal Reserve and the Bank of Japan meetings and some key economic reports due late in the week.

Data showed the UK economy likely contracted in July as businesses cut output and payrolls. A measure of private-sector activity in the UK dropped to its lowest level since early 2009.


Foreign exchange


The backdrop for the broad USD picture continues to improve in line with yesterday’s bullish breakout. This is in line with last week’s breakout in DXY above the June highs while presenting an important test at the 97.22/97.73 resistance zone.

AUDUSD tested its 100 day moving average (0.7485 – two closes below), but failed before settling back below it. So 0.7455 represents interim daily support, with a minor line now emerging at 0.7435.  The more important line continues to be its 50 day moving average (0.7409 – no close below since June 28).  And 0.7505 represents interim daily resistance, with its minor swing 15 day moving average (0.7532 – five closes below) more firm resistance.






US two-year bond yields jumped to a one-month high as the Treasury sold $26 billion of the maturity at steeper yields than indicated in pre-auction trading. Two year treasuries were sold at a yield of 0.76%, above the initially offered 0.745%.

Bund futures hit session high of 166.70 as data indicated that Europe’s biggest economy may be suffering from the impact from the Brexit vote last month.

The central bank is widely expected to hold interest rates on Wednesday but the language of the Fed statement will be crucial to gauge whether policy makers could hike rates by end of year.

Downside risks are much bigger than the upside in the Wednesday meeting if the statement emphasizes on the improved US economic data and the mitigation of financial crisis might be interpreted as a signal for rates raise.






US stocks backed away from record all-time highs as crude oil fell to three month lows and as investors turned cautious ahead of a busy calendar of earnings reports and key central bank meetings later in the week.

Eagle Materials Inc. rose +2.4% after reporting higher Q1 profit of $0.93 per share  than market estimate: $0.86. The earnings improvement was driven primarily by improved average net cement sales prices and cement sales volumes.

Verizon Communications Inc. (-0.4%) agreed to buy the Web assets of Yahoo Inc. (-2.7%) for $4.83bn in cash. The sale includes Yahoo’s core internet business and some real estate but excludes Yahoo’s cash.

E*Trade Financial Corp. (-3.2%) agreed to buy Aperture New Holdings Inc., the parent of online broker OptionsHouse LLC, for $725mln in cash to increase its derivatives capabilities.

European stocks crept higher on the back of solid earnings, resilient German business morale and deal-related news to overcome weakening oil prices. In the UK, the FTSE 100 fell 0.3% as the CBI's survey reported a slump in confidence

LVMH Moët Hennessy Louis Vuitton SE climbed after the luxury fashion house announced plans to sell Donna Karan International Inc. to G-III Apparel Group Ltd. in a $650mln deal.

Turkish equities rebounded over 3%, apparently supported by the possibility of fiscal stimulus

Asia Pacific stocks

Earnings (Times shown are Singapore time: GMT plus 8 hours)

  • Canon (7751 JP) H1.
  • Daikyo (8840 JP) Q1 1400 hours.
  • HK Electric Investments (2638 HK) H1.
  • Hui Xian Real Estate Investment (87001 HK) H1.
  • Komeri (8218 JP) 1Q 7.0b yen (3 analysts) 1500 hours.
  • M3 (2413 JP) 1Q 5.9b yen (3 analysts) 1400 hours.
  • Mapletree Commercial Trust (MCT SP) Q1.
  • Mapletree Industrial Trust (MINT SP) Q1 after-market.
  • Matsui Securities (8628 JP) H1 0720 hours.
  • Nisshin Seifun Group (2002 JP) H1 1300 hours.
  • ORIX (8591 JP) Q1 1430 hours.
  • Parkway Life REIT (PREIT SP) Q2.
  • Shimano (7309 JP) H1 1430 hours.
  • Shin-Etsu Chemical (4063 JP) Q1 51.6b yen (4 analysts) 1400 hours.
  • SIA Engineering (SIE SP) Q1 after-market.
  • SK Hynix (000660 KS) Q2 341.6bn won (24 analysts).

IPO Watch

  • China Harzone Industry (300527 CH) book building expected to end.
  • Mitsui Fudosan Logistics Park (3471 JP) expected to price.

Stocks to watch


  • China Minsheng Bank (1988 HK): Shareholder New Hope trims stake.
  • Wanda Commercial (3699 HK): Says China Life intends to support privatization plan
  • Yunnan Water(6839 HK): Expects significant profit gain.
  • Tianjin Tianhai (900938 CH): trading resumes today; says will get about $4.3b bank loans for Ingram Micro deal.


  • JSR (4185 JP): Q1 oper. profit 5.64b yen vs est. ¥7.67bn (7 analysts); to buy back 1.39% of shares.
  • Mitsui Home (1868 JP): Delays earnings report after finding past accounting problems
  • SoftBank (9984 JP): Sprint soars after progress in turnaround.

Southeast Asia

  • Aztech Group (AZ SP): To post losses for Q2 results to June 30, further impairment to marine-related assets.
  • Cahya Mata Sarawak (CMS MK): Gets letter of award for development of proposed highway in the state of Sarawak.

Source: Bloomberg

Wheat prices are heading in different directions in the US and Europe. Photo: iStock


– Edited by Robert Ryan

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